BHARTI AIRTEL LIMITED vs UNION OF INDIA on 10 March 2016

**ORDER**

**By Aftab Alam, Chairperson** – The petitioner, M/s, Bharti Airtel Ltd. is a telecom service provider under a licence granted by the Central Government under section 4 of the Indian Telegraph Act, 1885. It has filed this petition challenging the demand of penalty of Rs.1,96,38,000/- for committing breach of the guidelines prescribed by the DoT for verification of Customer Acquisition Forms ( CAFs) before activation of the SIM cards. The penalty is in respect of 469 CAFs from Odisha service area. In substance the case of the DoT is that the 469 CAFs were accompanied with forged documents and the forgery was not done by the customer. It thus followed that those CAFs were "non-compliant" (which is the expression used to mean that those were not properly verified following the departmental circulars) and the petitioner is, therefore, liable to pay the penalty in terms of the circulars. According to the petitioner, it is grossly unreasonable and unjust to hold it guilty of forgery in the CAFs in question and the petitioner is not liable to any penalty as the SIM cards against those CAFs were issued and activated only after fully following the departmental instructions. In any event the quantification of the penalty amount is made taking the percentage of non-compliance at 100 which is incorrect and contrary to the Tribunal's judgement dated 17 July 2014 in Petition No.272 of 2013.

The facts of the case are simple and may be stated thus. On analysis of its customer data base submitted by the petitioner for the month of September 2014 (that showed the number of its subscribers as 1,09,04,632), it was found that a very large number of connections (according to the respondent, running into thousands) had the same customer name and the same customer's father's name and further that in many such cases (again running into thousands) more than 9 connections were taken using the same customer name with the same father's name. In order to probe the matter further the TERM Cell selected two names/fathers' names, (i) Bapina Samal son of Dibakar Samal and (ii) Bharat Lenka son of Hrudananda Lenka and by email dated 25.11.2014 asked the petitioner to submit 841 CAFs "for other than monthly audit". On 02.12.2014, the petitioner submitted 469 CAFs pointing out that 372 out of 841 CAFs called for by the TERM Cell were repetitions; it further stated 39 out of 469 numbers submitted were deleted.

The 469 CAFs were further analysed and it was found that using 4 different pictures and 124 different Voter ID cards (purported to be issued from 78 different places), a total number of 251 SIM cards were obtained in the name of Bapina Samal son of Dibakar Samal. Similarly, using 4 different pictures and 109 different Voting ID cards (purported to be issued from 61 different places), a total of 157 SIM cards were obtained in the name of Bharat Lenka son of Hrudananda Lenka.

In light of the findings of the analysis of the 469 CAFs, the Joint Audit Report was signed by both sides on 02.03.2015. According to the petitioner, in the Joint Audit Report signed by it there was no suggestion or indication that forgery in the CAFs was done by anyone other than the customer. On 05.03.2015 the petitioner informed the TERM Cell by an email that all the 469 connections given against those CAFs were deactivated. Nevertheless, on 09.03.2015 a demand notice was issued against the petitioner asking it to pay Rs.1,96,38,000/-, for failure to comply with subscriber verification guidelines issued by the DoT from time to time. In paragraphs 6 and 7 of the demand notice it is stated as under:

"6. WHEREAS it is observed from the report of the above referred sample CAF audit that **M/s Bharti Airtel Limited** has failed to comply with the essential requirement of subscriber verification like photo on CAF, I.D. proof and address proof address proof, and 3(i), 3(ii) and clause 4 of DoT instructions issued on 22.11.2006 and subsequent instruction issued thereafter, in 469 cases. The total number of violations are (sic.) in 469 cases. However, number of violation for which penalty is to be imposed are **469 (Annexure-II)**

7. **AND WHEREAS** it is clear from the above report that proper verification has not been carried out by the Service Provider at the time of providing service to these subscribers. Hence, **M/s Bharti Airtel Limited** has violated the terms and conditions of Licence Agreement and the instructions issued from time to time by licensor on the subject by providing mobile connection with proper verification."

(emphasis supplied in the original)

On 13.03.2015 the petitioner lodged a police complaint in regard to the forgeries and informed the TERM Cell that it had moved the police in the matter. On the same day the petitioner also filed an appeal against the demand notice but it was dismissed by order dated 24.03.2016 passed by the Dy. Director General TERM Cell, Odisha. The petitioner then came to the Tribunal challenging and the imposition of penalty and the order passed on its appeal. We will advert to the appellate order in due course but before that it would be useful to take a brief look at the process of verification of a CAF and the activation of the SIM card.

It has been repeatedly observed by the courts and this Tribunal that a proper verification of the CAF is meant to prevent a highly potent mode of communication falling into wrong hands and it is thus related to the safety and security of the country. Clause 41.1.4 [Part VI] (as later amended) of the UAS licence agreement under which the petitioner operates, casts the obligations on the licensee to ensure adequate verification of every customer before enrolling him as a subscriber and to scrupulously follow the instructions issued by the licensor in this regard. The clause also empowers the Government to take necessary measures in the interest of national security.

In exercise of powers vested in it under the licence, the DoT has issued departmental instructions from time to time laying down the guidelines for verification of the CAF. It has also provided for a scheme for financial penalty for violation of terms and conditions of the licence agreement in respect of subscriber verification. The TERM Cells of the DoT set-up in every service area carry on monthly audit of the CAFs, taking a random sample of 0.1 percent of the total number of subscribers of the service provider. Apart from the monthly audit, the TERM Cell may also carry out any CAF verifications as and when something out of the normal and ordinary comes to its notice, as in the present case. Such audits are called "other than monthly audit".

Briefly put, the guidelines laid down by the DoT require the intending customer to present at the Point of Sale (PoS) of the service provider's SIM cards, the Customer Acquisition Form (CAF), in the prescribed format, duly filled up and bearing his/her signature with a signed copy of the customer's photograph affixed to it along with his/her proof of identity (PoI) as well as proof of address(PoA), for which certain documents (including the Voter ID card) are specified by the DoT. The person at the PoS, on being satisfied that the form is correctly filled up and it bears the signature and the photograph of the customer and is accompanied with PoI and PoA related to the customer, would put his/her own signature on the CAF and then give to the customer the SIM card.

The SIM, at this stage, is not activated and can be used only for making to and receiving a call from the service provider. On receiving a call from the customer, the service provider would satisfy itself that the SIM card was in possession of the person to whom it was sold as per the description given in the CAF and then only the SIM card would be activated for normal use.

It is obvious that the guidelines, though comprehensive, are still no proof against frauds and forgeries. The departmental instructions, therefore, provide that if it comes to light that a SIM card was obtained by committing fraud or forgery, the service provider would be obliged to deactivate the SIM card, apart from lodging a case with the police. If the service provider discharges all these obligations, it would not be liable to any penalty for non-verification of CAFs (DoT's instructions dated 08.02.2010 and 09.08.2012).

Keeping the aforesaid, we now revert back to the order passed on the petitioner's appeal.

In the appeal the petitioner challenged the demand notice, *inter alia*, on the following two grounds as formulated in the impugned order:

"2. As per DoT instructions at para 10(viii), no penalty shall be imposed on the Licensee, if the laid down process of activation/verification applicable at the time of activation has been followed and the forgery is done by the subscriber.

3. Complaint filed with Police Stations against the subscriber for providing forged documents by them at Point of Sale for these 469 connections."

Repelling the grounds urged by the petitioner, the appellate authority observed and held as under:

**"Type of Forgery observed:**

**WHEREAS** CAF documents submitted for audit by the appellant M/s BAL., it is observed that in all 469 cases only 8 photos were used having 24, 45, 47, 49, 58, 78, 81 & 87 mobile connections respectively. In each of these 8 groups whereas the photo, name of the customer & father's name are same but documents in CAFs have different addresses, different POIs, different POAs, different signatures of customers, different Voter card ID Numbers, different Places of issue, different dates of issue, different names of distributors and different names of retailers. *Therefore from the type of forgery observed in CAF documents, submitted by the appellant M/s BAL, it conclusively appears that forgery is not done by the customer. Therefore, the contention of the appellant that CAF documents are forged by the customers is not correct.*

(emphasis in the order of the appellate authority)

Dr. Singhvi strongly assailed the finding by the appellate authority that forgery was not done by the customer and that actually insinuated that the forgeries were committed by the petitioner and it was, therefore, liable to penalty.

Dr. Singhvi submitted that more than the monetary penalty, it is the insinuation in the order that is unjust and hurtful. Learned counsel submitted that the petitioner is one of the largest providers of telecommunication services in the country and it is also engaged in providing telecommunication services overseas. The petitioner has done nothing to deserve the charge of forgery which plainly has heavy overtones of criminality and the observation and finding of the appellate authority was based on no evidence. He further submitted that at the relevant time, the petitioner had the subscriber base of 1,09,04,632 in the service area of Odisha and it is inconceivable that it would indulge in committing forgery to acquire a few hundred or even a few thousand additional customers. The addition of a few thousand customers would mean nothing for its revenue for which the petitioner might even think of committing forgery.

Dr. Singhvi further submitted that on the facts of the case no reasonable person would come to the conclusion that the petitioner was even vicariously liable for the commission of forgery in the CAFs. In support of the submission he also relied upon some decisions of the courts.

We find much substance in the submissions advanced by Dr. Singhvi. In the appellate order it is nowhere stated that the petitioner issued the SIM cards against those CAFs and activated those SIM cards without following the instructions regarding verification of CAFs and activation of the SIM card. But the appellate authority had before it 469 CAFs that were evidently fraudulent and that used forged documents. Still the petitioner would not be liable to penalty unless the forgeries in the CAFs were attributed to the petitioner itself. And that appears to us to be the reason for the appellate authority to cast the charge of forgeries against the petitioner.

The manner in which SIM cards were obtained using the 469 forged CAFs would further make the position clear and it is ironical that the details in that regard come from the counter affidavit filed on behalf of the DoT. The CAFs in question were examined by the TERM Cell in great detail and the anomalies appearing therein are enumerated in Annexure R5 and summarized in a Table given at paragraph 24 of the counter affidavit. The Table is as under:

<table border="1"> <thead> <tr> <th>S. No</th> <th>Name of the Customer</th> <th>Father's Name</th> <th>Photo used</th> <th>Number of SIMs sold to</th> <th>No. of cities from where SIM has been sold to</th> <th>Number of Point of Sale involved</th> <th>Year of SIM sold</th> <th>No. of Voter ID Cards used</th> <th>No. of places from where Voter ID issued</th> <th>Year of Voter ID card issued</th> </tr> </thead> <tbody> <tr> <td rowspan="5">1</td> <td rowspan="5">BapinaS amal</td> <td rowspan="5">DibakarSa mal</td> <td>Photo1 – Person1</td> <td>78</td> <td>17</td> <td>47</td> <td>2013 &amp; 14</td> <td>36</td> <td>24</td> <td>2013</td> </tr> <tr> <td>Photo 2 – Person2</td> <td>45</td> <td>13</td> <td>29</td> <td>2013 &amp; 14</td> <td>23</td> <td>14</td> <td>2013</td> </tr> <tr> <td>Photo 5 – Person 5</td> <td>81</td> <td>15</td> <td>52</td> <td>2013 &amp; 14</td> <td>40</td> <td>21</td> <td>2013</td> </tr> <tr> <td>Photo 6 – Person 6</td> <td>47</td> <td>12</td> <td>35</td> <td>2013 &amp; 14</td> <td>25</td>

<td>2013</td> </tr> <tr> <td><b>Total</b></td> <td><b>251</b></td> <td><b>57</b></td> <td><b>163</b></td> <td></td> <td><b>124</b></td> <td><b>78</b></td> <td></td> </tr> <tr> <td rowspan="5">2</td> <td rowspan="5">Bharat Lenka</td> <td rowspan="5">Hrudanand Lenka</td> <td>Photo 3 – Person3</td> <td>87</td> <td>19</td> <td>64</td> <td>2013 &amp; 14</td> <td>36</td> <td>20</td> <td>2013</td> </tr> <tr> <td>Photo 4 – Person 4</td> <td>49</td> <td>16</td> <td>34</td> <td>2013 &amp; 14</td> <td>27</td> <td>16</td> <td>2013</td> </tr> <tr> <td>Photo 7 – Person 7</td> <td>58</td> <td>14</td> <td>40</td> <td>2013 &amp; 14</td> <td>31</td> <td>16</td> <td>2013</td> </tr> <tr> <td>Photo 8 – Person 8</td> <td>24</td> <td>10</td>

<td>2013 &amp; 14</td> <td>15</td> <td>9</td> <td>2013</td> </tr> <tr> <td><b>Total</b></td> <td><b>218</b></td> <td><b>59</b></td> <td><b>157</b></td> <td></td> <td><b>109</b></td> <td><b>61</b></td> <td></td> </tr> </tbody> </table>

From the Table it appears that the SIM cards against the 469 CAFs were issued in the years 2013 and 2014. The exact period over which the SIM cards were issued can be gathered from Annexure R5 which shows that the SIM cards were activated over the period from 15.02.2013 to 29.08.2014. From the above table it further appears that 251 SIM cards were obtained in the name of Bapina Samal on different dates from 163 different Points of Sale situated in 57 different cities. In case of Bharat Lenka, 218 SIM cards were similarly obtained on different dates from 157 different Points of Sale situated in 59 different cities. On these facts, it would be difficult to hold that any of the Points of Sale was in collusion or connivance in commission of any forgery that might vicariously lead to the petitioner, that is, the principal.

In the facts of the case, we are satisfied that the charge against the petitioner that it was responsible for the forgeries in the 469 CAFs is wholly unsustainable and cannot form the basis for imposition of the penalty. The appellate order and the demand notice are accordingly set aside.

There is, however another aspect of the matter, to which we feel the need to draw the attention of the DoT. In our view it is highly commendable of the TERM Cell to detect the fraudulent connections obtained on the basis of forged documents in a database of over 1 crore customers. The investigations made by the TERM Cell further showed that a number of forged Voter ID cards were used as PoI and PoA for obtaining the SIM cards. It is thus not only a case of obtaining SIM cards fraudulently but Voter ID cards were also obtained using fraudulent means. The extent and the nature of the case are clearly such that the State IB and the higher officials in the law enforcement agencies should have been alerted instead of a report being lodged at some police station. In the counter affidavit filed by the DoT there is no indication that any such steps were taken to curb the nefarious activities that really might pose a threat to national security or in any case to social security. The DoT, it appears, was content to secure for itself the amount of penalty. The Tribunal has said it on earlier occasions and it is reiterated that the real object and purpose of CAF verification is national security and not the generation of an additional source of revenue. We hope that even now the matter would be brought to the notice of the law enforcement agencies in the State government.

In the result the petition is allowed.


(Aftab Alam) Chairperson

(Kuldip Singh) Member

(B.B. Srivastava) Member